FATF

The Financial Action Task Force (FATF) is an independent intergovernmental body headquartered in Paris. Established in 1989 at the initiative of the G7, its purpose is to combat the misuse of the international financial system by criminals. The FATF currently comprises 40 member jurisdictions.

The primary objective of the FATF is to set standards and promote the effective implementation of legal, regulatory, and operational measures to counter the three major financial crimes:

  1. Money Laundering (ML): The process of concealing the origin of illegally obtained funds.
  2. Terrorist Financing (TF): The provision of financial support to terrorist acts or organisations.
  3. Proliferation Financing (PF): The provision of financial support for the proliferation of weapons of mass destruction (added to the mandate in 2012).

The FATF does not prosecute or impose fines on countries. Instead, it holds them accountable through a rigorous peer-review process known as Mutual Evaluations.

If a country fails to effectively implement the standards, the FATF may publicly identify it by placing it on one of two public lists, commonly referred to as the "grey list" and the "black list". Inclusion on these lists significantly increases international scrutiny and can adversely affect a country’s financial transactions and reputation.

In summary, the FATF is the global policy-making and standard-setting body whose recommendations form the foundation of the legal framework for combating illicit financial flows in nearly all countries.

Last update